Amazon’s Disappointment Sinks Wall Street

Stocks were lower on Friday, July 28, after disappointing earnings from Amazon.com Inc. (AMZN) overshadowed a pickup in U.S. economic activity over the second quarter.

The S&P 500 fell 0.32%, the Dow Jones Industrial Average was down 0.13%, and the Nasdaq slid 0.37%.

The Nasdaq was in the red for another day. A surprise tech selloff, led by Twitter Inc. (TWTR) , shook markets on Thursday, July 27. The sudden turn lower dragged the Nasdaq from record highs and soured an overall upbeat mood in the morning session. The Dow Jones Industrial Average did manage to score a new record close on Thursday, however.

Amazon.com Inc. tumbled 3.1% after a quarterly performance that fell well short of analysts’ estimates. Earnings of 40 cents a share were a far cry from $1.41 consensus. Profit declined 77% from a year earlier. A sharp miss on the bottom-line was tied to the company’s efforts to invest heavily in areas such as fulfillment, original content and international expansion.

The U.S. economy picked up significant speed in the second quarter. Economic growth came in at 2.6% from April to June, more than double the first quarter’s 1.2% growth. Consumer spending increased 2.8%, while business fixed investment rose 2.2%. Analysts anticipated growth of 2.4% over the second quarter.

In a statement, the Bureau of Economic Analysis said the increase “reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, and federal government spending that were partly offset by negative contributions from private residential fixed investment, private inventory investment, and state and local government spending.”

Employment costs increased 0.5% over the second quarter, according to the employment cost index. The rise was slightly below expected growth of 0.6%. Employment costs have increased an unadjusted 2.4% over the past 12 months.

Starbucks Corp. ( SBUX) fell nearly 8% after in-line earnings results and below-consensus revenue. The coffee shop chain also announced it would close all its Teavana stores, its tea-focused concept chain. Starbucks said it would close all 379 Teavana locations over the coming year, citing underperformance. In April, Starbucks said it was reviewing options for Teavana.

Exxon Mobil Corp. (XOM) was lower after missing analysts’ profit estimates in its recent quarter. The oil-industry leader earned 78 cents a share over its second quarter, nearly double earnings a year earlier, though below consensus of 84 cents. Revenue of $62.9 billion came in higher than estimates of $61.3 billion.

Chevron Corp. (CVX) moved higher after swinging to a quarterly profit. The oil company earned $1.5 billion, or 77 cents a share, compared to a loss of $1.5 billion, or 78 cents a share, a year earlier. However, earnings did not meet estimates of 86 cents a share. Revenue of $33 billion was in-line with estimates.

Crude oil prices were higher ahead of weekly drilling activity data to be released Friday afternoon. A weekly count on active oil rigs drilling for crude in the U.S. will be released by Baker Hughes at 1 p.m.

West Texas Intermediate was up 0.1% to $49.09 a barrel on Friday morning.

Consumer sentiment retreated in July, though not as fast as analysts anticipated. The measure decreased to 93.4 in July from 95.1 in June. Analysts expected a reading of 93.1.

The vote was the third time in three days that Republicans failed to coalesce around a way to repeal and replace Obamacare. Donald Trump voiced his displeasure with the vote in a tweet on Friday: “3 Republicans and 48 Democrats let the American people down. As I said from the beginning, let ObamaCare implode, then deal. Watch!”

“This is clearly a disappointing moment,” said Senate Majority Leader Mitch McConnell after the voting closed. “It’s time to move on.”

Democratic leader Charles Schumer of New York said, “We are not celebrating, we are relieved.” Passage would have meant adding millions to the ranks of the uninsured.